LexSAIT NAGJEE PURUSHOTHAM AND CO. versus COMMISSIONER OF INCOME-TAX, MADRAS
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' .. • fJ S.C.R. SUPREME COURT REPORTS 91 tained allegations only as regards 6 and not as regards the rest. This would mean that the Tribunal had no jurisdiction to find that more than 6 votes had been improperly rejected in his case. If the votes regarding which no plea of impro- priety had been raised by Jabar Singh were eliminated, it would follow that as a result of the final scrutiny Genda Lal had obtained properly 5,660 valid votes as against 5,658 pol- led by Jabar Singh. The result of the election, therefote, was materially affected by the improper reception or refusal of votes and therefore I consider that the election of J a bar Singh was properly set aside and that is why I concur in the order that the appeal should be dismissed. Appeal dismissed. SAIT NAGJEE PURUSHOTHAM AND CO. v. COMMISSIONER OF INCOME-TAX, MADRAS (A. K. SARKAR, M. HIDAYATULLAH AND J. C. SHAH JJ.) Income Tax Act (II of 1922). s. 25(3) and (4)-Firm carrying on business in 1918-Disintegration into two firms-If discontinuance of business . By s. 25(4) of the Income-tax Act, 'Where the person who was at the commencement of the Indian Income-tax (Amendment) Act, 1939 .... carrying on any business, profession or vocatioa in which tax was at any time charged under the provisions of the Indian Income- tax Act, 1918, is succeeded in such capacity by another person, the change not being merely a change in the constitution of a partnership, no tax shall be payable by the first mentioned person in respect of the income, profits and gains of the period between the end of the previous year and the date of such succession." A firm bearing the same name as the appellant firm, had been carrying on business from before 1918 and had paid tax on that business under the Income-tax Act, 1918. The firm did three kinds of businesses, namely, (a) in piece-goods, yarn as general merchants, 1961 Jabar Singh v. Genda Lal Ayyangar J. 1963 December, 20 SUPREME COURT REPORTS [1964] 1963 (b) in the manufacture and sale of umbrellas and (c) in the manu- s .1 N . p facture and sale of soaps. There were various changes in the con- ar ag1ee uru- . . shotham & Co. s!Jtuhon of the firm between 1918 and 1934. In May 1939 two T. Commissioner Income-taz, Madras documents were executed, one by the then members of the firm, and of a stranger H. being Ex. CI and the other by those members alone,. being Ex. CII. It appeared from Ex. CI that the business in the manufacture and sale of umbrellas and soaps was being carried on from October-November 1937 by the parties to it as partners while Ex. CII showed that the parties to it had been carrying on the business in yarn, piecegoods and as general merchants as partners from the same time as mentioned in Ex. CI. On October 30. 1943 a document styled as. an agreement of partnership was executed by five persons who were then the persons interested in the businesses carried on . under the instrument of May 30, 1939. This document referred to the two agreements of partnership of May 30, 1939 and certain subsequent retirements of partners and admissions of new partners and provided that the businesses previously carried on by the two partnerships referred to in the instruments of ~fay 30, 1939, wou~d thereafter be carried on by one single partnership constituted by the parties to it. Thereafter all the businesses aforesaid were carried on by this single partnership. The firm constituted by the instrument of October 30, 1943 continued with certain changes in its constitution till February 7, 1948 when the then partners of: it entered into an agreement with a company to transfer the business of the firm to the latter, the transfer to be completed by February 13, 1948 and the transfer was in fact made. The firm constituted by the document of October 30, 1943 claimed relief under S· 25(4) in assess1nent for the years 1948-49 and 1949-50 on the ground that it had been carrying on a business on April 1, 1939 when· the Income-tax (Amendment) Act, 1939 commenced to operate on which business tax had been charge'd under the Act of 1918 and that it was succeeded in that business by a company in February J 948. Held: (per Sarkar and Shah JJ.). The assessee was not entitled to- the relief. Exs. CI and CII showed that the busihess that had been carried on by the firm existing in 1918 was discontinued in October /November 1937 and its busines
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